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video games

AND THE ECONOMY

Entertainment software is one of the fastest growing industries in


the U.S. economy. In fact, according to PricewaterhouseCoopers,
the sector remains “one of the above-average growth segments
of the global entertainment industries through 2011.” From 2005-
2006 the industry’s real rate of growth was more than double the
real rate of growth for the entire economy. In addition, computer
and video games companies posted record sales in 2007 with
revenues of $9.5 billion. In addition, entertainment software
companies continue to add jobs to state and local economies
across the nation.

U.S. ECONOMIC IMPACT


A recent study, “Video Games in the 21st Century: Economic Contributions of the U.S.
Entertainment Software Industry,” detailed the impact that computer and video game
companies have on America’s economy. The study found:

G From 2003 to 2006, the entertainment software industry’s annual growth rate
exceeded 17 percent. Over the same period, the entire U.S. economy grew at a less
than four percent rate;
G In 2006, the entertainment software industry’s value added to U.S. Gross Domestic
Product (GDP) was $3.8 billion;
G The entertainment software industry makes a disproportionate contribution to the
real growth of the nation as whole. For example in 2005-06, the industry’s
contribution to real growth exceeded its share of GDP by more than four to one.
The U.S. entertainment software industry also continues to grow as a source of employment.
Currently, computer and video game companies directly and indirectly employ more than
80,000 people in 31 states. The average salary for direct employees is $92,300, resulting in
total national compensation of $2.2 billion. By 2009, it is projected that the industry will
support over a quarter of a million American jobs.

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STATE ECONOMIC IMPACT
The entertainment software industry’s economic growth also provides benefits to individual
states. New Jersey, for example, witnessed a boom in industry growth in recent years as
computer and video game companies have expanded beyond New York City. Virginia’s
entertainment software industry, meanwhile, grew by 552 percent in 2006, with computer
and video game companies adding $28.7 million to the Commonwealth’s economy.

California, Washington, Texas, New York and Massachusetts currently have the highest
concentration of video game jobs. Collectively, these areas directly
employ 16,604 workers and post 70 percent of the industry’s total
indirect employment.
$92,300
G California: California leads the nation in computer and The average salary for an
video game personnel, accounting for approximately 40 entertainment software
percent of total industry employment nationwide. The industry employee.
state’s 34,600 computer and video game employees
added $1.7 billion to the California economy in 2006,
which marked a 12.3 percent growth rate over the
previous year. The industry grew nearly three times faster than the overall state
economy. California game companies also provided over $1.8 billion in direct and
indirect employee compensation.
G Washington: In 2006, Washington ranked second nationally in computer and video
game personnel, with 9,284 direct and indirect employees. The industry added
$497.2 million to the state economy, which equated to a growth rate of 14.4 percent,
more than double Washington’s overall growth.
G Texas: Texas has the nation’s third largest concentration of computer and video
game personnel, with 7,688 direct and indirect employees. In 2006, the industry
grew at a 17 percent rate, adding $395 million to the state economy. The overall
Texas economy finished that year with a 4.3 percent growth rate.
G New York: Coming in fourth for concentration of entertainment software companies
is New York with 4,415 direct and indirect employees. The industry added $279.1
million to the state economy in 2006, which equated to a 13.9 percent growth rate.
This was more than quadruple New York’s overall growth rate.
G Massachusetts: In 2006, Massachusetts ranked fifth nationally in computer and
video game personnel, with 3,192 direct and indirect employees. The industry grew
at a 12.3 percent rate, more than quadrupling the commonwealth’s overall growth
and added $162.9 million to the state economy.

INDUSTRY SALES
In 1996, the U.S. entertainment software industry accounted for a modest 74.1 million units
sold and $2.6 billion in sales revenue. Eleven years later, computer and video game
companies sold 267.8 million units, leading to an astounding $9.5 billion in revenue.

As Brandon Curial, president and CEO of game developer and publisher Venan
Entertainment Inc., says, “You have the older gamers that haven’t stopped playing, and you
have younger kids that are getting into it every day. With something like the Nintendo Wii,
you even have parents playing these games now. Each year, the market just expands, and it’s
going to keep expanding for, well, a long time.”

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According to data recently compiled by the NPD Group, in 2007 U.S. video game console
software sales reached $6.6 billion (153.9 million units), computer games sales were $910.7
million (36.4 million units) and there was a record $2 billion (77.5 million units) in portable
software sales. The genre with the greatest growth was “Family Entertainment,” which grew
110 percent (17.2 percent of all games sold in 2007, up from 8.3 percent in 2006). According
to a PricewaterhouseCoopers report, this trend is expected to continue with global sales
projected to reach $48.8 billion by 2011.

The video game industry also stimulates complementary product purchases of roughly
$6.1 billion a year. For example, video games are spurring demand for HDTV sales.
Approximately $73 million in HDTV sales can be directly attributed to the XBox 360
game console.

9 267.8 million
Number of computer and/or video The number of computer and
games sold on average every video game units sold in the
second of every day of 2007. U.S. in 2007.

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